Voice-first: the future?June 17, 2017
The retail industry is changing rapidly, and technology is helping hasten this change
BY CRAIG PATTERSON
VOICE-ASSISTANT smart speakers are one of the latest trends in retail—Amazon Echo and Google Home currently dominate, and players such as Apple and Samsung are now launching their own devices. It’s more than just a fad, according to experts—the ease of use and overall convenience could see voice activated smart speakers become common in Canada, and retailers should stay up to date on technology to best adapt to the latest industry disruption.
Amazon’s smart speaker, called Amazon Echo, currently dominates with a 70 per cent share of voice assistant speaker sales globally—more than 31 million have been sold to date. Google Home holds most of the remaining market share with about 14 million units sold, according to the latest Consumer Intelligence Research Partners (CIRP) report. Both use voice recognition and artificial intelligence to respond to vocalization.
In Canada, Google Home became available in the summer of 2017, with Amazon Echo following in November. Amazon was first in the United States however, hence why it boasts a higher market share. While both of the voice-activated smart speakers share similar home automation and artificial intelligence capabilities, Amazon’s version is geared toward the sales channel, while Google Home fits into the powerful Google ecosystem that is rooted in advertising as a business model.
Leading the search
Amazon has already streamlined the purchase process for many consumers—having an Amazon account often includes pre-inserted credit card information on file, making purchasing quick and simple. Consumers are no doubt receptive to this. When searching for products, an estimated 56 per cent of shoppers in the US, UK, Germany and France use Amazon as a starting point. That might come as a surprise to some, who expect Google to be a point of first research. It might also be a concern to retailers that otherwise do not sell through Amazon.
A VOICE IN THE MATTER
Percentage of voice assistant market share owned by Amazon.
Number of Amazon Echo voice-assistant devices sold globally.
Number of Google Home voice-assistant devices sold globally.
Percentage of shoppers in the US, UK, Germany and France who use Amazon as a starting point when searching for products online.
Amazon’s Echo Dot was the top-selling Amazon device for the 2017 holiday season, and it sold out quickly. Amazon currently offers several voice-assistant devices that are powered by ‘Alexa’, which is an intelligent personal assistant developed by Amazon that is capable of voice interaction, music playback, making to-do lists, setting alarms, streaming podcasts, playing audiobooks, and providing real-time news. Users can extend Alexa’s capabilities by installing “skills” to improve functionality—Amazon notes on its website that because Alexa lives in a digital cloud, it is “always getting smarter, and updates are delivered to one’s devices automatically”.
This ease of use will see voice-assistant smart speakers increasingly become commonplace in the near future, predicts Kyle Murray, Vice Dean and Professor of Marketing at the University of Alberta School of Business in Edmonton. Consumers are drawn to what’s convenient, and it’s generally easier to speak a command than to type on a desktop or text on a mobile device.
The future is connected
It’s part of a phenomenon called ‘ambient computing’, explained Murray, with a future featuring connected devices that can be activated by simple voice command. For Google Home, that can include vocalizing a request that one might otherwise type into Google. And with Amazon Echo, shopping is simplified.
Technology is changing quickly, and Murray says that there’s a possibility that the future “will be truly ambient”—a future that could eventually include having ‘natural conversations’ with in-home devices. He likens it to the early days of the internet.
“We’re at the beginning of a real transformation in how we interact with machines,” he said, explaining how the entire consumption process could be simplified through voice command. Ultimately, consumers are going to choose convenience, and companies such as Amazon and Google are seeking to streamline the experience.
Carl Boutet, a Montreal-based retail strategy consultant, described the multi-functionality of voice-activated smart speakers, of which he has both the Amazon and Google versions in his personal household. Google Home can be voice activated to provide a wide range of information, and he expects an eventual technology integration that could see Google Home controlling lighting, security systems and other in-home features. Amazon Echo is a terrific tool for keeping lists, he explained. And while consumers might be initially hesitant to buy something with a voice command, we might soon expect this to be part of everyday life in Canadians’ homes.
Boutet noted that there’s a correlation between Amazon Echo and Prime users. According to a CIRP report, Amazon Echo owners spend an average of $1,700 (US) a year on Amazon, more than the $1,300 (US) a year that Amazon Prime members typically spend annually on Amazon’s e-commerce site. “We’ve long thought that Amazon is keenly focused on building increasingly loyal and frequent shopping customers, and Echo seems to promote that goal,” CIRP’s Co-Founder Josh Lowitz said in the report, which was based on a survey of 2,000 US shoppers. Amazon Echo shoppers also tend to be more loyal, according to CIRP.
Amazon Echo Dot became a holiday 2017 best-seller after Amazon reduced its price south of the border to (US) $29. Boutet questions if the next phase will be free Amazon smart speakers for Amazon Prime users who don’t already own one.
When a household becomes used to interacting with voice-activated speakers for day-to-day activities, using one to buy things becomes intuitive. It’s that comfort of interacting with Alexa that will lead to habit and loyalty, ultimately leading to increased usage and higher and more frequent retail sales. Google stands to gain as well if it can integrate e-commerce into its own device—Google has the advantage of years of data that it can use to target consumers.
“WE’VE LONG THOUGHT THAT AMAZON IS KEENLY FOCUSED ON BUILDING INCREASINGLY LOYAL AND FREQUENT SHOPPING CUSTOMERS, AND ECHO SEEMS TO PROMOTE THAT GOAL.”JOSH LOWITZ
Consumer Intelligence Research Partners
While Google Home appears to be less about shopping, Boutet says he sees an opportunity for Google to partner with companies such as Walmart and Target to go after Amazon in the world of voice-activated shopping. The possibilities are virtually limitless, he explained, and the future is uncertain as to what consumers will embrace and what new products will be released.
Privacy could become a concern to some, with Google and Amazon collecting user data—Amazon aims to “learn” one’s spending patterns, and Alexa could eventually determine what we need to buy before we even realize it. Google, as well, uses data to target consumers with advertising. Privacy watchdogs in Canada are no doubt watching, given that these smart devices are within proximity to many of our most intimate activities.
What’s in store?
Companies such as Apple are also in the process of rolling out their own voice-activated smart speakers. With a low market share and high price, Apple is coming in as the underdog. But given its propensity for innovation, not to mention its phenomenal brand loyalty, Apple could also become a significant player in the world of home voice command technology. Samsung has also said that it will introduce its own version of the smart speaker in early 2018.
The future is uncertain, and many Canadian retailers are watching voice technology closely. One thing many experts agree on is that it’s too soon to judge just how popular voice-activated smart speakers will become. Given their ease of use and rapid adoption, we might expect to see more in the near future. Another consideration is new market entrants that may also look to introduce similar technologies. Chinese e-commerce company JD.com, for example, is making inroads into the United States this year. And the jury is still out as to what role Alibaba could play in the global as well as local retail market.
One thing is clear, however—retailers that want to be successful in the future are going to have to study trends such as voice-activated speakers and find ways to remain competitive by adopting similar technology, or by offering a value proposition that can’t be obtained online. For some, that means going back to good old-fashioned in-store service— while artificial intelligence may look to mimic human communication, it’s difficult to replace face-to-face interaction. Or is it?